The cryptocurrency market is witnessing significant developments as the possibility of a spot Bitcoin ETF approval increases. Centralized exchanges are seeing a surge in stablecoin inflows, particularly Tether and USD Coin, indicating investors are preparing to enter the market.
Data from CryptoQuant shows that stablecoin holdings in centralized exchange wallets rose from $18.05 billion on January 1st to over $19.99 billion by January 7th. The total stablecoin market value is now approximately $133.4 billion, according to CoinMarketCap.
The total transaction volume of all stablecoin projects is currently around $70 billion, with Tether alone accounting for $55.86 billion. A closer look at CryptoQuant data reveals a sharp increase in stablecoin amounts held in exchanges during the first eight days of 2024, correlating with a rise in Bitcoin price, which hit over $47,000 on January 8th.
The increase in stablecoin market value and the inflow and outflow of stablecoins on exchanges serve as important indicators of market positioning. The possibility of the SEC approving the first spot Bitcoin ETF has accelerated stablecoin exchange inflows, with the bullish momentum continuing to rise at the beginning of January.
Large stablecoin inflows into crypto exchanges are usually considered a short-term factor for Bitcoin price movement, indicating capital returning to Bitcoin. Independent analyst Cole Garner provided further evidence of increased activity for stablecoins. Hence, the growing stablecoin inflows on exchanges could signal that investors are preparing for market volatility expected on January 10th, when the SEC makes its final decision on spot Bitcoin ETF applications.
